Whether you’re looking for some assistance paying your medical bills or struggling to put food on the table, you have more options than social security when it comes to funding. One of the most popular financial aids, for those who qualify, is an ABLE account — or tax-advantaged savings account designed to provide funds to those who are struggling to pay for day-to-day life because of their disabilities.
What is an ABLE Account?
Achieving a Better Life Experience (ABLE) Accounts are tax-advantaged savings accounts that are available to certain people with disabilities. ABLE accounts are designed to aide individuals pay for housing, education, health and other expenses.
How do I know if I’m eligible?
Individuals who meet the 26 and under criteria and are already receiving SSI and/or SSDI benefits are automatically eligible to open an account. If you do not meet the age requirement and are not currently receiving benefits, you may still be able to open an account if your circumstances meet Social Security’s definition of functional limitations and you have a letter of certification from a licensed medical professional.
What can ABLE account funds be used for?
ABLE account funds can be used for “qualified disability-related expenses” (QDE). A QDE is any expense the beneficiary incurs as a result of the disability. These may include expenses related to education, housing, transportation, employment training and support, assistive technology, personal support services, healthcare expense, financial management and administrative services, and other expenses that help improve health, independence and/or quality of life.
Although you do not need to submit receipts for the expenses, they should be kept along with other documentation of the expense. If you’re unsure whether something is a QDE, you can check with the Internal Revenue Service (IRS), the only organization that can make that decision.
How do ABLE accounts affect my Social Security disability benefits?
If you receive SSDI, are working, and deposit part or all of your earnings into an ABLE Account, Social Security still considers this deposited money as “countable earnings” and applies work incentives to determine if you’re engaging in substantial gainful activity (SGA). However, deposits made into an ABLE account by others are not considered countable income for determining SGA.
However, if you receive SSI benefits, the ABLE Act sets further limitations. According to the LEAD Center, the first $100,000 in your ABLE Account would be exempted from the SSI $2,000 individual resource limit. If and when your ABLE Account exceeds $100,000, your SSI benefit payment would be suspended until the account falls below $100,000. It is important to note that while your eligibility for a benefit payment is suspended, this has no effect on your ability to receive or be eligible to receive medical assistance through Medicaid.
How do I open an ABLE account?
The ABLE Act limits eligibility to people with disabilities who had an onset of disability before they turned 26. If you meet the eligibility criteria, you must choose the state where you plan to open your account. More than half of the states in the country have launched ABLE programs, and you are not required to establish your account in the state where you live. After you decide to open your account in a particular state, click on that state in the state review to access the program website and complete the online application. Some states, but not all, have an application you can download. You’ll need the following information and to make a few choices:
- Personal identification
- Federal law requires name, street address, date of birth, and Social Security number, among other information, to verify your identity.
- Identification of your disability
- Some applications include various categories. If you don’t receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits, you will need general information about the disability to certify that it began before age 26.
- Information about anyone authorized on your account
- This includes your legal guardian, conservator, or someone with power of attorney, or a parent or guardian of an account holder who is a minor.
- Banking information
- Investment options
- Choices may include multiple savings and investment options with varying degrees of investment risk.
In addition to deciding how your money will be invested, you will be asked whether you would like to establish recurring deposits or withdrawals. These may include payroll deposits from an employer or withdrawals for recurring expenses like rent or utilities.
For more information on how you can setup and best utilize your ABLE account, visit ablenrc.org.
Source: Ticket to Work, ABLE National Resource Center